FINANCE Minister , Dr. Ngozi Okonjo-Iweala, has said that the Federal Government was ready to go ahead with the controversial Sovereign Wealth Fund (SWF) with or without governors.
The Co-ordinating Minister of the Economy said the Federal Government would expand the SWF by, at least, N160 billion ($1billion) a year, despite lingering opposition from governors.
The fund is designed to safeguard oil revenues for future generations, and cushion Nigeria's economy against external shocks.
Unlike many members of the Organisation of Petroleum Exporting Countries (OPEC), Nigeria has never had a sovereign fund, and decades of high oil production have failed to result in any significant savings.
Seed capital for the new fund was limited to $1billion to appease the 36 governors, who feared a cut in their share of national revenues.
By law, Nigeria’s income is shared among the federal, state and local governments.
However, Dr. Okonjo-Iweala told the Financial Times that the Federal Government aimed to transfer up to N16 billion ($100 million) a month to the fund.
“Even if it’s just the Federal Government and we are putting in $1billion a year, within the next five years, the fund will be $6 billion. Several states have told us they will join us, and hopefully, more will follow. We have to build their trust.”
With oil prices far above the $72-a-barrel benchmark in the budget, bigger savings should be possible.
But finances remain squeezed in part because Nigeria’s fuel subsidy programme ballooned to $14 billion last year.
Though the subsidy was partially scrapped in January, its cost this year remains high due to arrears payments and continued waste.
In June, the Presidency mooted a $4 billion supplementary budget to cover the subsidy.
In addition, theft of up to 400,000 barrels of oil a day could be costing the government and oil companies more than $1 billion a month.
The fund has three components: a future generations fund, a stabilisation fund and an infrastructure fund.
Each will constitute, at least, 20 per cent of the total fund, and will require separate investment strategies.
Uche Orji, an investment banker with United States (U.S.) and European experience, will manage the fund.
“This is a huge event for Nigeria,” said Dr. Okonjo-Iweala. “It sends a signal that we are willing to save our resources and husband them well. It will also show that we have a means to stabilise the economy that is underpinned by law.”
The new fund will initially run alongside the existing savings account, known as the Excess Crude Account, which was set up during Dr. Okonjo-Iweala’s first stint as Finance Minister in 2004 during the administration of former President Olusegun Obasanjo.
Revenues above the benchmark oil price are supposed to flow into the account.
From $20 billion in 2007, the Excess Crude Account fell to $4 billion last year.
It has since risen to about $8 billion.
Dr. Okonjo-Iweala said the government hoped to boost the account to $10 billion by next March, which should be enough to “act as a buffer” for two or three months in case of an economic shock.
The steady build-up of the account was proof that the country was not broke, as some reports have suggested, the minister said.
At the same time, she is targetting foreign exchange reserves of $50 billion within six months – up from $41 billion now.
“Then we will really be in good shape,” she added.
Meanwhile, the Senate yesterday summoned Dr. Okonjo-Iweala, Governor of the Central Bank of Nigeria (CBN), Malam Sanusi Lamido Sanusi and the Accountant General of the Federation over non release of PTDF Fund for three years The Senate Committee Chairman on Petroleum Upstream, Senator Emmanuel Paulka, issued the summon on behalf of the Upper Chamber after the committee's interactions with the management of the Petroleum Technology Development Fund (PTDF) over budget implementation.
Regretting what it described as an unfortunate situation that has illegally persisted for three years, the committee wondered how the agency managed to survive without grants since 2010 and vowed to take the matter to a logical conclusion."
The fund for PTDF is statutory. Nobody has the right to withhold this money. We are going to invite CBN governor, Minister of Finance and Accountant-General to explain to us why the funds have been withheld. We will help you locate where your money is," he said.The Committee Chairman also demanded to know the investment portfolio of the PTDF and details of their programmes.
PTDF Executive Secretary, Muttaka Rabe Darma, an engineer, had earlier told the committee that the Agency has been operating on a grant of $100 million since 2010.He said: "If monies are not released, all the contracts, including ongoing ones, will be stopped.
We have written to the Ministry of Finance for cash backing since 2010 but no response."He noted that although they have money to run their academic programmes for the next eight months, there may be no fund to continue unless funds are released early enough.
Meanwhile, the Senator Bukola Saraki-led Senate Committee on Environment has directed Total Nigeria to ensure continuous provision of relief materials to victims of gas eruption in 17 communities in Rivers State, pending when the people return to their farm lands.
The committee observed that since the eruption occurred in April, the people have been prevented from going to their farms and other sources of livelihood.The committee further observed that since the incident occurred, Total has failed to carry out health care mechanisms as well as post impact assessment to find out the effect on the community.
The committee noted that Total lacked management commitment to safety, stressing that workers operate without helmet and other standard procedures, pointing out that the information provided to the committee were not reliable and designed to mislead it and Nigerians.